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More employers offering long-term disability insurance policies

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Increasingly, employers are offering long-term disability insurance to their employees. However, according to the Council For Disability Awareness, the number of employees choosing to take advantage of this employee benefit decreased last year

The group, which represents 19 insurance companies, found that while the number of employers rose, albeit slightly, for the second consecutive year, the number of employees opting for coverage has dropped by almost two million since 2009. This could be in part because more employers are providing it as a voluntary benefit, which means that employees who buy it pay the full cost. In earlier years, employers covered that cost and automatically enrolled employees.

Long-term disability insurance can be a much-needed source of funds if you are unable to work for a period of time because of an illness or injury. It's essential, however, to make sure you have enough to take care of you and your family while you're laid up. The typical benefit provided by an employer plan is 60 percent of your salary up to $5,000 per month. Some employers allow you to purchase more. When they don't, employees can opt for a personal insurance policy that will cover more of their salary.

When deciding whether to purchase LTD insurance, it's important to consider a few important facts and misconceptions. Older workers are not the only ones who need it. Forty percent of new claims in 2013 came from people under 50. Illness and accidents can happen to anyone.

Another misconception about LTD insurance is that it's largely used for injuries or serious illnesses like cancer. While cancer accounted for 15 percent of new claims last year, 29 percent were for connective tissue and musculoskeletal system disorders such as arthritis. Only 10 percent were for injuries, and that included poisoning.

Many people believe they can rely on Social Security disability insurance if they are incapacitated. However, SSDI has a lengthy and difficult qualification process. Further, even if you do qualify, benefits can be very low, particularly for younger people.

Getting adequate LTD insurance is an important step. However, do some research on how good the company is at paying claims. If and when you need it, you want to be able to get the money that you've counted on. People whose claims are wrongly denied, however, can and should seek legal advice to help get money that is rightfully theirs.

Source: Forbes, "Disability Insurance: The Overlooked Employee Benefit", June 19, 2014

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